ASX 200 energy share tumbles 7% as 'key' project guidance scrapped

Beach Energy is having a day to forget on the market.

| More on:
gas and oil worker on pipeline equipment

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Beach Energy share price is tumbling 7.3% right now to trade at $1.307
  • The ASX 200 energy share has ditched its targeted schedule and capital estimates for the Waitsia Stage 2 gas project
  • The move is a response to uncertainty arising from Clough’s administration and Western Australia’s tight labour market

The share price of S&P/ASX 200 Index (ASX: XJO) oil and gas producer Beach Energy Ltd (ASX: BPT) is plummeting on news that guidance for its Waitsia Stage 2 gas project has been scrapped.

Its previously targeted schedule and capital estimates for the project have gone out the window, the company revealed this morning.

The shake-up comes after construction group Clough entered voluntary administration on the back of a tight labour market.

The Beach Energy share price is $1.307 right now, 7.3% lower than its previous close.

Let's take a closer look at the news dragging on the ASX 200 energy share on Thursday.

Beach Energy shares tumble as project guidance binned

It's been a hair-raising few months for the Waitsia Stage 2 project, currently being developed by a joint venture between Beach Energy and Mitsui.

It all started in December when Clough – the original engineering, procurement, and construction contractor for the project – was placed into voluntary administration.

After weeks of uncertainty, Webuild signed on to deliver the project in February.

But it hasn't been smooth sailing since.

The ASX 200 energy producer today revealed progress at the Waitsia Gas Plant has been impacted by Western Australia's tight labour market.

Due to continuing uncertainty, Beach Energy said it "no longer considers it prudent or appropriate" to stand by its targeted schedule and capital estimates.

First gas at the project's second stage was previously expected this year. Beach Energy lifted its expected expenditure for the project to between $400 million and $450 million in February. That was up from its original forecast spend of $350 million to $400 million.

The ASX 200 energy share has vowed to undergo a review of the project's costs and schedule. Meanwhile, Webuild will look for opportunities to mitigate impacts and constrain uncertainties.

Beach Energy said the project remains "strongly value accretive and a key element in Beach's future growth". It will update the market on its review when it's finished.  

Beach Energy share price underperforms ASX 200

Today's slump is just the latest blow felt by the Beach Energy share price.

The stock has tumbled 17% since the start of 2023. It's also trading 23% lower than it was this time last year.

For comparison, the ASX 200 has lifted 4% year to date and 1% over the last 12 months.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Energy Shares

Why is the Beach Energy share price racing higher on Thursday?

This energy producer delivered some big news this afternoon.

Read more »

A person is weighed down by a huge stack of coins, they have received a big dividend payout.
Energy Shares

Own Ampol shares? Get ready for your monster dividend payment

Ampol investors are about to enjoy their largest-ever dividend.

Read more »

A man sees some good news on his phone and gives a little cheer.
Energy Shares

Buy Woodside shares for a 20% gain and 4.5% dividend yield

Morgans thinks investors could get big returns from this energy giant.

Read more »

Woman holding $50 notes and smiling.
Dividend Investing

A 36% yield from this ASX dividend share? Here's how these forward-looking investors made it happen

Some savvy passive income investors are earning a 36% yield from this ASX dividend star.

Read more »

A Paladin Energy miner wearing a hard hat and protective gear stands in front of a large mining truck and smiles to the camera.
Energy Shares

Uranium is set to boom, and this is the 'premium' ASX stock to buy

Shaw and Partners' Jed Richards reckons these are the shares to buy for the nuclear energy theme.

Read more »

Happy coal miner.
Energy Shares

How these ASX 200 energy shares could unexpectedly burn brighter

ASX 200 energy shares are facing rising global demand for their products.

Read more »

Worker inspecting oil and gas pipeline.
Energy Shares

ASX energy shares losing charge amid fresh warnings of gas supply shortfalls

Many energy commodity prices fell overnight and this is hitting ASX energy shares today.

Read more »

A miner stands in front oh an excavator at a mine site
Energy Shares

'We have reached a bottom': 5 ASX uranium shares leaping higher this week

ASX uranium stocks have enjoyed explosive share price growth over the past year.

Read more »